CHAPTER 99

FORMERLY

SENATE BILL NO. 115

AS AMENDED BY SENATE AMENDMENT NOS. 2, 5 AND 7

AN ACT SUPPLEMENTING THE PROVISIONS OF TITLE 26 OF THE DELAWARE CODE ANNOTATED RELATING TO THE REGULATION OF PUBLIC UTILITIES PROVIDING TELECOMMUNICATIONS SERVICES.

BE IT ENACTED BY THE 137TH GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. This act shall be known as the "Telecommunications Technology Investment Act."

Section 2. Create a new Subchapter VIIA of Chapter 1, Title 26 Delaware Code Annotated providing as follows:

§704. Election of a Telecommunications Service Provider to be Governed by This Subchapter VIIA.

(a) A telecommunications service provider offering services as defined within section 705 of this Subchapter may elect, upon or after the effective date of this Act, to determine its rates and prices for its telecommunications services pursuant to the provisions of this Subchapter VIIA. Upon the filing of written notice to the Commission of such an election, the provisions of Subchapter III of this Chapter 1 shall no longer apply except as specifically provided hereinafter and, in lieu thereof, the provisions of this Subchapter VIIA shall govern. No such election shall be made by a telecommunications service provider or accepted by the Commission unless accompanied by a Plan for Technological Investment and Deployment as provided in section 711 of this Subchapter.

(b) An initial election by a telecommunications service provider to be governed by the provisions of this subchapter VIIA shall be effective for a term of not less than 5 years. Not less than one year prior to the expiration of the initial term, and any subsequent term, the telecommunications service provider shall notify the Commission whether or not it wishes to continue to be governed by the provisions of subchapter VIIA. Upon receipt of such notification the Commission shall commence an open and public proceeding to determine whether the continued application of subchapter VIIA to such telecommunications service provider is in the public interest and if so, for how long or, if not, what appropriate form of regulation should be applied to such provider under the provisions of Section 703 of Title 26. The Commission shall conclude any such proceeding by final Order within 12 months from the filing of such notification and, in making its determination, the Commission shall give appropriate consideration to the form of regulation, if any, then applicable to competitors of such telecommunications service provider. A telecommunications service provider proposing to continue to be governed by the provisions of subchapter VIIA is not required to file an additional plan for technological Investment and deployment under the provisions of section 711 of this subchapter.

§705. Definitions.

(a) 'Basic Services' shall mean those local exchange carrier telecommunications services: (1) which are offered in the absence of services or products with the same or similar capabilities offered by another service provider; (2) for which significant barriers exist impeding entry into the market; (3) which are provided for the purpose of completing local telephone calls; (4) which are for the purpose of providing access to the local exchange carrier's network; or (5) which are purchased as necessary components for other providers of telecommunications services to offer, exclusive of stand alone resale offerings, their telecommunications services. Unless and until the Commission shall determine otherwise pursuant to section 706 of this Subchapter, 'Basic Services' shall include the following:


(A) Residence, Business, Public and Semi-public 'Dial Tone Line' services;

(B) Residence, Business and Public 'Local Usage Services';

(C) 'Switched Access' services;

(D) 'Exchange Access Component of Centrex' service;

(E) 'White Pages Listings; whether Listed, Non-Listed or Private.;

(F) 'Local Directory Assistance Service';

(G) 'Telecommunications Relay Service';

(H) '911 Enhanced Emergency System';

(I) 'Direct Inward Dialing' for PBX trunks;

(J) 'Basic Service Elements';

(K) 'Touchtone Service';

(L) 'ISDN service' and features;

(M) 'Basic Rate Interfaces';

(N) 'Primary Rate Interfaces';

(0) Services categorized as 'Basic Serving Arrangements' except for 'High Capacity Special Services' (1.544mb and above); and

(P) 'Complementary Network Services' except as provided by a local exchange carrier to end users or for stand alone resale. The Commission may, after notice and hearing, classify other telecommunication services as Basic Services.

(b) 'Discretionary Services' shall mean those telecommunications services which are neither 'Basic Services' nor 'Competitive Services'.

(c) 'Competitive Services' shall mean those services which have been classified as such by the Commission based upon its determination that: (1) there are similar or substitute services or products which are offered and generally available within the relevant geographic area from at least one unaffiliated provider; (2) there is at least one unaffiliated service provider which is present and viable; and (3) there are no significant barriers to market entry. The Commission may also consider any other factors it deems relevant and in the substantial public interest in making determinations regarding the classification of services as competitive. Unless and until the Commission shall determine otherwise pursuant to section 706 of this Subchapter, 'Competitive Services' shall consist exclusively of the following:

(A) 'Directory Advertising';

(B) '800 Service' and 'Wide Area Telephone Service';

(C) Billing and collection services provided by one service provider to another telecommunications service provider or other party;

(D) 'Centrex Intercom and Features';

(E) 'Inside Wire Services';

(F) 'Answer Call and Voice Mail Services';

(G) 'High Capacity Special Services (1.544 mb and above)';

(H) 'Operator Services -- Call Completion and Non-Local Directory Assistance';

(I) Any telecommunications service determined by the Commission to be competitive prior to the effective date of this Act.

(d) Phrases used to identify specific services within the foregoing classifications shall be given the meanings commonly ascribed to them in proceedings before the Commission. In the event the Commission concludes any of such phrases to have uncertain meaning, the Commission shall, by order after a duly noticed hearing, adopt an appropriate definition.

§706. Offering, Classification and Abandonment of Services.

(a) Any telecommunications service provider intending to offer a new telecommunications service shall provide the Commission with notice of its intention to do so as follows:

(1) For a new Basic Service, such notice shall be given no less than sixty days prior to the proposed implementation date. Such notice shall conform to Commission rules applicable to tariffed service and shall provide the Commission with information sufficient to demonstrate that the service is correctly classified as Basic and the proposed rates are just and reasonable.

(2) For a new Discretionary Service, such notice shall be given no less than 20 days prior to the proposed implementation date and shall provide information sufficient to demonstrate that the service is correctly classified as Discretionary and that the proposed rates are just and reasonable.

(3) For a new Competitive Service, such notice shall be given no less than 20 days before the proposed implementation date and shall provide information sufficient to demonstrate that the service is correctly classified as Competitive.

(1) A local exchange carrier filing notice pursuant to this subsection shall serve a copy thereof on all interexchange telecommunications carriers and service providers who have requested such notice as well as the Office of the Public Advocate.

(b) The Commission may extend the proposed implementation date for any new service for good cause shown; provided, however, that notwithstanding such extension, the service provider may offer its new service as described and classified in its original filing unless the Commission shall have, by final order entered within 90 days of such original filing, established a classification or, in the case of a Basic or Discretionary Service, rate other than that proposed by the service provider.

(c) Commencing with the date which is twelve (12) months after an initial election made pursuant to section 704(a) of this Subchapter, the Commission may reclassify telecommunications services among and consistent with the telecommunications services classifications set forth in section 705 of this Subchapter. Any party, including the Commission's staff, proposing any such reclassification shall have the burden of supporting its proposal, except with respect to the reclassification of a Competitive Service, in which case the telecommunication service provider shall bear the burden of demonstrating that said service continues to be a Competitive Service. Where the Commission shall have reclassified a service as a Basic Service, the Commission may determine whether the current rate is just and reasonable. Where the Commission shall have reclassified a service as a Discretionary Service, the Commission may determine whether the current rate is just and reasonable, but in no event shall any new rate set by the Commission be lower than the rate in effect at the time of an initial election made pursuant to Section 704(a) of this Chapter.

(d) Basic Services may be abandoned pursuant to the provisions of Section 203A of Title 26. Notwithstanding the provisions of 203A(c) of Title 26, a telecommunications service provider may abandon a Discretionary Service after providing the Commission and public with sixty (60) days notice of its intention to do so, unless 2% or more of the telecommunications service provider's customers for the service have petitioned the Commission, within the notice period, to retain the service. A telecommunications service provider may abandon a Competitive Service after providing the Commission and public with thirty (30) days notice of its intention to do so.

§707. Provision of Basic Services.

(a) Except for the determination of rate changes for Basic Services, which determinations shall be made pursuant to the provisions of this section, the offering of Basic Services in this State shall be subject to the provisions of subchapters I, II and V and sections 301, 303(a), 304, 305 and 308 of this Chapter and all Commission procedures, rules and regulations shall apply except to the extent inconsistent with the provisions of this Act. Changes to the terms and conditions for the offering of a Basic Service, other than rate changes, shall continue to require Commission approval.

(b) After January 1 of the year immediately following the initial election made pursuant to section 704 of this Subchapter, rates for Basic Services may be changed by the service provider or upon Commission initiative according to the following formula; provided, however, that a rate for a Basic Service may not be changed more than once in any calendar year:

Change in Rate - Change in Gross Domestic Product-Price Inflater since last rate change minus 3%. The Gross Domestic Product-Price Inflation Index shall be that published by the United States Department of Commerce with the most recent available data for the relevant period or, in the event that such index is discontinued, the index determined by the Commission to most closely approximate the discontinued index.

(c) The following exceptions to the rate changes otherwise determined by the foregoing formula shall apply:

1. A service provider may elect not to implement all or a portion of a rate increase otherwise required by the formula.

1. A service provider may elect to decrease rates in circumstances where the formula would require otherwise.

2. In circumstances where a rate decrease would result from an application of the formula, the decreased rate shall not be lower than the incremental cost of providing that Basic Service as determined by the Commission.

3. Upon application by a service provider, the rate structure for a Basic Service may be adjusted by the Commission where such adjustments would neither increase nor decrease the total revenue to the service provider from that particular Basic Service.

4. Upon application by a service provider other than a local exchange carrier, the rates charged for a Basic Service which is purchased as a necessary component by such other provider of telecommunications services in order to offer its telecommunication services may be adjusted by the Commission upon a showing by such other service provider that the rate is not just and reasonable.

5. Upon the application by any ratepayer or the service provider, rates for Basic Services may be adjusted with approval by the Commission in order to reflect an unforeseen change in the service provider's costs of providing telecommunications services, which change occurs for reasons beyond the control of the applicable service provider. Such change may include, but not be limited to, legal or
regulatory changes which affect such costs, 'the method of accounting for such costs or taxes applicable to the service provider.

(d) Rate adjustments made pursuant to subsections 707(c)(4) and (5) of this subchapter may be made with the Commission's approval at any time and shall not be limited to once in any year.

§708. Provision of Discretionary Services.

(a) Any local exchange carrier provider of a Discretionary Service may determine its rate and the terms and conditions under which such Discretionary Service will be offered subject only to the following requirements:

(1) Rates for Discretionary Services must equal or exceed the incremental cost of providing such services;

(2) If a Basic Service is used to provide a Discretionary Service, the rate for the Discretionary Service shall equal or exceed the sum of the rate for the Basic Service plus any additional incremental costs not covered by the rate for the Basic Service;

(3) All Discretionary Services must be made available for resale by other telecommunications service providers;

(4) No rate for a Discretionary Service or element thereof may be increased by more than 15% in any calendar year;

(5) Notwithstanding the provisions of this subsection (a) of Section 708 of this Title, no rate for a Discretionary Service shall be increased by a local exchange company within one year of such company's initial election made pursuant to section 704(a) of this title.

(b) No proposed change for a Discretionary Service rate may be made except upon 14 days notice to the Commission in the case of a proposed increase or upon 5 days notice in the case of a proposed decrease. Any telecommunications service provider offering Discretionary Services shall maintain a list of such services and rates currently charged for such services at the offices of the Commission, which list shall be available for public inspection.

§709. Provision of Competitive Services.

Any provider of a Competitive Service may determine its price and other terms and conditions under which such Competitive Service will be offered, subject only to the following requirements:

(1). No price for a Competitive Service may be set below the incremental cost of providing such service as determined by the Commission.

(2). If a Basic Service or a Discretionary Service is used to provide a Competitive Service, the price for such Competitive Service shall equal or exceed the sum of the rates of the Basic Services and Discretionary Services plus any additional incremental costs the provider incurs to provide the Competitive Service.

(3). In the event that a service provider offers a Competitive Service which requires the use of a Basic or Discretionary Service also offered by such service provider, such service provider must separately identify each such Basic or Discretionary service and make such services available to other service providers at the same rate and on the same terms and conditions as such service is used by such service provider.

(4). All Competitive Services except Directory Advertising must be made available for resale by other telecommunications service providers.

§710. Prohibition Against Cross-Subsidization Of Competitive Services; Cost Allocation.

(a). Cross-subsidization of Competitive Services with revenue generated by Basic Services or or Discretionary Services is prohibited. Cross-subsidization of Discretionary Services with revenue generated by Basic Services is prohibited.

(b). The Commission shall initiate a proceeding to determine whether to require a service provider to follow 'a specified methodology for allocating costs among such service provider's intrastate services to ensure that cross-subsidization does not occur among services, and if so, the methodology that such service provider should follow. Notice of any such proceeding shall be given to all parties requesting such notice and to the public in accordance with Commission rules.

§711. Plan For Technological Investment and Deployment.

Simultaneous with any initial election made pursuant to section 704(a) of this Subchapter, any service provider which is a local exchange carrier offering Basic Services in this State shall file with the Commission a five-year plan generally outlining its projections for investment in and deployment of telecommunications technology during such five year period.

(1) Such plans shall describe a level of planned investment in technological or infrastructure enhancement.

(2) Such plans shall describe the extent to which such investment will make new telecommunications technology available to rate payers or expand the availability of current technology. In describing such new or expanded telecommunications technology, the plan shall address the findings of public policy set forth in section 702 of this Title and shall identify the economic and community development effects of the proposed investment. Specifically, the plan shall identify potential gains in the areas of education, health care and the delivery of governmental services that might be produced or assisted with proposed advances toward state-of-the-art telecommunications infrastructure.

(3) Any such plan filed by a telecommunications service provider offering Basic Services as defined within Section 705 of this Subchapter upon the effective date of this Act shall include:

(i) Target dates by which such new or expanded telecommunications technology will be available to ratepayers, including a schedule pursuant to which Integrated Services Digital Network Services shall be made available to ratepayers in this State no later than three years after an initial election made pursuant to Section 704(a) of this Subchapter, furthermore, a schedule pursuant to which all switches in this State shall be connected by fiber by the end of the period covered by the Plan.

(i) A level of planned investment in an amount not less than $250 million.

(4) On or before a date 24 months after an initial election by a telecommunications service provider section 704(a) of this Title, said telecommunications service provider shall file a progress report with the Commission, Public Advocate and any other interested party requesting such a report. The report shall briefly describe the telecommunications service provider's financial and technological progress relative to the investment in and deployment of telecommunications technology during the previous 24 months. A similar report shall be filed for the subsequent 24 month period.'

(5) Progress reports submitted pursuant to subsection 711(4) shall include data relative to the telecommunication service provider's operating and intrastate and interstate financial performance during the relevant period.

Approved July 8, 1993.